The PCGA latest data on higher side has somewhat restrained buyers, while ginners are also holding back stocks assuming surge in over a month's time in cotton demand. The spot rate was firm at Rs 1,850 without upcountry expense.
WORLD SCENARIO: Long holidays ahead for Xmas have sidelined cotton buyers while players awaited USDA export sales for likely direction in its wake. Trade and speculative sales have blocked chances of surge not to forget record crop, which is keeping tone down. The futures finished easier on trade and speculative sales in quiet dealings with fiber contracts seen poised to grind higher in days to come.
Analysts said the market will likely try to grind its way toward higher levels and then move in a band ahead of long Christmas holiday break.
On Tuesday second day of trading futures closed marginally lower on trade and speculative sales in lethargic trade, with the market seen struck in a band because players are already in a holiday frame of mind.
Futures started slightly higher as expected on speculative buying to hoist cotton to its best level for the day, but trade sales locked it hick and small speculators piled in brokers said. Others added that funds might pick up the pace in reducing their short position but "The slow-down in trading volume that accompanies the holidays is likely to make it difficult for funds to exit longs."
Futures continued lower on Wednesday as trade and speculative selling into sell stop orders hit prices before local buying buoyed the market in pre-holiday trade. Futures began the day a little higher on some speculative buying, but turned lower as speculative and trade selling ran prices into sell-stop orders before local buying lifted prices off their lows, players said.
Thursday's session, last of the week owing, to Xmas holidays and was futures was firmer also for the first time, as speculative short covering lifted prices of their lows in moderate pre-holidays dealings.
Meanwhile much awaited US department of Agriculture weekly export sales report showed sales at 155,300 RBs 500 LBs each against 299,300 last week.
Technicians pegged resistance in March at 44 cents and 44.75 while support was seen at 42 cents and 41.75 cents.
LOCAL TRADING: The ginners fortnightly statement regarding arrivals on the higher side restrained both the sellers and buyers as prices showed only marginally change in levels. The spot rate which had opened at Rs 1,850 sustained for few days phutti prices have not touched to procurement level of Rs 925.
In Punjab and Sindh on Monday seed cotton was seen at the same amount at Rs 750 and Rs 850. The trading began with 10,000 bales at prices between Rs 1,700 and Rs 1,900.
Growers have been appreciating the Trading Corporation of Pakistan (TCP) role ensuring them a better return. On Monday, two major event took place, primarily the seed cotton arrival at higher pace prompted ginners to drop spot rate by Rs 25 to Rs 1,850 and secondly both the major players - ginners and millers took some breather to decide to stop for the time being before releasing cotton for sales and millers thought on similar lines to lift sporadically to press ginners to pull down prices with the flow in seed cotton supplies.
On Tuesday cotton stayed firm with spot rate showing no change at all at Rs 1,850. The Punjab and Sindh seed cotton however fluctuated differently Punjab at a bit higher rate at Rs 750 and Rs 875 and in Sindh it cost between Rs 700 and Rs 850 cotton changed hands at prices between Rs 1,600 and Rs 1,925 due to quality. Only 5,000 bales were sold. The ginners held their nerves and the official spot rate at Rs 1,850 without upcountry expenses on Wednesday.
In ready prices remained steady in Punjab at Rs 1,700 and Rs 1,925 and in Sindh cotton was sold at Rs 1,600 and Rs 1,925.
This showed premium lots were sold at equal price that is Rs 1,925. However the talk cotton demand and price scenario will be different beyond January. TCP role is being appreciated but which has slightly lower lifting. Thursday's session was not any spectacular. The spot rate showed no change and stayed at Rs 1,850. Sindh was selling seed cotton between Rs 700 and Rs 850 in Punjab phutti was sold between Rs 750 and Rs 875.
The TCP has not been withdrawn but the corporation has on its own selling much lower than it entered the market. Sources said two million cotton needs big reserve which has exhausted. However, a very unusual type of enthusiasm has over taken the textile world over as WTO regime in only a week away.
RESIST HOW LONG: When the TCP's role went on stretching merely from stabilising the prices to ensure growers were not exploited and got the govt fixed Rs 925 per Kg. Government soon realised that was not happening. It asked TCP to buy cotton from ginners, who paid growers Rs 925 for their seed cotton supplied to them. But all these protests from growers and instructions from authorities were so meekly voiced that they were headed was not heard.
The strange situation had a definite back ground and all players tacitly embraced and the umpire the government with not too many alternatives in hand-preferred to keep quiet. The great dampening factor was ever increasing seed cotton arrivals which if had not been accepted in the ginneries, seed cotton prices would have come down to around Rs 600 and deeper silence would have prevailed. Hence, not all players at heart quite satisfied had but to show as such to keep a hold on cotton trading going out of hand and unmanageable.
Not in Pakistan alone but God has been merciful in almost all cotton growing countries including America, China (produces highly and even then needs huge imports) India and Pakistan.
Never in history of cotton trading such situation was observed. Thank God the cotton growers and textile exporters had to accept unique opportunity World Trade Organisation (WTO) regions offered to them. So far no press club premise has seen any cotton burnt by the desperate growers, as consumers mercilessly backed out and at times growers claimed they were refused payment equal to input cost. But bumper crop had brought in its wake certain. Quarries laden with problems such as one being whether TCP should invite local consumers to take part in international tenders? The point above every thing is that loss on any count and to any one is not acceptable, sources said.
BUMPER CROP: Unlike any other years the bumper crop had decidedly brought cheers for every one engaged in cotton and textile trade. In the previous years major consumer of cotton, adopted such measures that would render but price depressed. The objective was clear. But this year bumper has come with a - message: Wake up to produce cheep and quality products and rob the markets, without any risk to you. But big risk is there attached - stuffs should be competition.
America and Europe are primarily determined to produce sophisticated items requiring has challenges from those countries who have been defensive right from the beginning owing to production of products without touch of technology and handling by skilled work process.
Unlike poorer countries who have to depend primarily on God Gifted raw material and cheaply employed labour force. They are, however, also depending on the skill to manipulate things to give it a legal effect. Then there are poor countries mainly in Asia, Africa and Latin American countries whose products will have a touch of fine workmanship and much less monetary involvement.
The last country, which has skill and workforce with technology and superior talents has already over taken the rest of textile produces psychologically. Countries, including America has sought concession from China so that disruption is not caused or it will seek solution for the same. Where from such apprehension still lingered on after annual exercises for over a decade.
TIAL PIECE: The role has been asked to play this season, need pondering whether it should be henceforth considered a permanent third party buyer. So far the practice has been that "victories" approach authorities and get TCP to help stabilise cotton prices.
This season it has so far bought around two million bales and needs space. The latest in that TCP will soon have 10 more godowns.
The manufacturers of value-added goods have long history of straggle to see primary and some raw materials like yarn and gray cloth are at least restricted
The WTO system in a weeks' time will need textile products are given more facilities to keep it competitive when quote is phased out. Or, textile industry is given relaxation in taxes.
To facilitate the manufacture-cum exporters of textile products the Central Board of Revenue (CBR) has announced sales tax at the rate of zero percent would be applicable on the supply of "imported ginned cotton".
Details with supporting stories Inshaallah next review day as holidays have cut short by two days.
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